Over the past two years, COVID-19 and its long-term effects have proven to be tremendously challenging for organizations. From the struggle to adjust amid changing CDC recommendations to the abrupt shift to work-from-home and the mass resignation of employees that began in early 2021, companies have had to embrace agile strategy and execution practices in order to survive, let alone stay ahead of the competition.
The companies that did thrive in the wake of the surrounding upheaval were the ones that had high organizational health. In fact, research has shown that strong organizational health can lead to 3 times the total shareholder return and has proven to be the key to long-term performance.
Optimizing organizational health becomes even more important during periods of uncertainty but for many business leaders, it remains a conundrum they can neither quantify nor improve — and too often, this causes them to neglect the initiative altogether.
Let’s dive deeper into organizational health, how you can measure it, and you can use it to help your business weather any storm.
What is organizational health? Why is it significant?
Organizational health is a company’s ability to align itself around its shared driving principles and implement them effectively. It refers to the strategic goals, decision-making skills, and ability to adapt and renew in the face of changing tides. When beginning to tackle an organizational health strategy, companies must examine the way they operate and ensure their operations are oriented towards their objectives.
Research shows that businesses can see tangible gains within six to 12 months of focusing on organizational health. And these gains were hardly negligible; businesses that launched their organizational health initiatives saw earnings and total returns to shareholders increase by 18% and 10%, respectively.
Making organizational health a priority is the first step a business should take to ensure that they continue to thrive in the face of uncertainty. HR professionals and business leaders who are interested in improving their organizational health should examine the following:
- Your organization’s core values and how well you align around a common strategy
- How effectively leadership executes the company strategy
- How the company adjusts and renews its goals to meet changes in the market
Lessons learned during the pandemic
COVID-19 tested the resilience of businesses across a variety of industries. They were suddenly forced to adapt to remote work, extreme changes in market supply and demand, and much more. While most struggled to adjust to changing demands in these uncharted waters, the organizations that were healthiest had the best odds of weathering the storm.
What did healthy organizations do to survive – and thrive – during the pandemic?
- Fast innovation: Healthy companies used contributions from employees and leaders alike to innovate quickly and more frequently.
- Clear roles and responsibilities: Companies provided employees with a clear understanding of their roles and responsibilities which enabled the organization to react effectively to major changes.
- Inspiration and meaning: Leaders focused on inspiring their employees and helping them find meaning in their work to increase engagement and productivity.
Of course, surviving the pandemic was not just about the actions an organization took. It was also about the things they didn’t do. Healthy organizations stepped away from pre-COVID long-term goals and adjusted their expectations and their KPIs to meet the new landscape. They also understood the negative implications of pushing their employees too hard during times of immense uncertainty, and so they adapted their leadership behaviors accordingly.
What makes an organization “healthy”?
While every organization strives for increased productivity, retention, and earnings – building organizational health comes down to focusing on the following elements:
1. Alignment
Over time, leaders can lose sight of their mission and core values and shift focus on surviving the day-to-day, especially when times get tough. But healthy organizations lean on their values as the driving force behind their decisions and find balance when they need to react.
Organizational alignment requires you to match your business operations to your values and goals. This results in business decisions that consistently support a core strategy, producing a healthier business overall and long-term employee commitment.
2. Leadership
Organizational health starts with leadership. Leaders establish the culture and inspire employees to believe in organizational values. In today’s market, leaders need to be health-focused, and they also need to be versatile. When change inevitably rocks an organization, leaders need to model resilience and adjust according to the new paradigm of the moment. They also need to be able to adapt to different forms of leadership, including passive (monitoring progress, establishing goals, etc.) and active leadership (collaboration, deep learning, etc.). This versatility can lead to higher engagement and higher performance.
3. Leveraging data
Healthy organizations leverage data. They derive value, intelligence, and insights from data and use them to drive business decisions daily. To be healthy, organizations need to think qualitatively and quantitatively and glean insights from their data.
Measuring organizational health is the only way to track progress and improvement and there is one place where an organization must collect regular data: its own workplace. A healthy organization will gather and quantify unbiased intelligence and use it to understand its people and processes. By gathering insights in real-time, companies can act fast using existing data flowing through the organization.
4. Increased resilience
Resilience refers to the ability to adapt and rebound in the face of disruption. Healthy organizations need to think holistically about resilience, particularly in the following categories:
- Financial resilience: preparing for any events that could impact liquidity, income, and assets
- Operational resilience: preparing for any events that could affect technology, facilities, or supply and demand
- Reputational resilience: recognizing how the organization is perceived by the public and building a reputation based on trust and dependability
5. Engagement
Employee engagement is vital to organizational health. When employees are engaged, they are more productive, they produce work of higher quality, and they are less likely to leave their workplace. Focusing on driving success at the individual level results in optimal better organizational health across the company. Discover our key recommendations to cultivate employee engagement in light of the Great Resignation.
6. Wellbeing
According to the World Health Organization, occupational health is closely associated with public health. When your employees feel respected, cared for, and purposeful in their work, they tend to enjoy better physical and mental health – and this can benefit your workplace greatly: up to 10.8 times fewer absent employees and a 5.4-time increase in the ability to attract new talent. In fact, research shows that leaders who regularly talk about health and wellbeing have companies who are four times more likely to outperform their peers.
When it comes to optimizing organizational health, understanding the underlying drivers that impact your organization’s ability to succeed such as wellbeing, engagement, and resilience, is key. Get a real-time view of organizational health and lay the groundwork for achieving corporate goals while empowering your employees today.